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PROFILE

Geography
Area: 56,542 sq. km. land area (slightly smaller than West Virginia), 31,067 sq. km. coastal sea area.
Major cities (2011): Capital--Zagreb (792,875). Others--Split (178,192), Rijeka (128,735), Osijek (107,784).
Terrain: Croatia is situated between Central and Eastern Europe. Its terrain is diverse, containing rocky coastlines, densely wooded mountains, plains, lakes, and rolling hills.
Climate: Croatia has a mixture of climates. In the north it is continental, Mediterranean along the coast, and a semi-highland and highland climate in the central region.

GEOGRAPHY
Croatia serves as a gateway to Eastern Europe. It lies along the east coast of the Adriatic Sea and shares a border with Serbia, Montenegro, Bosnia and Herzegovina, Hungary, and Slovenia. The country has a distinct boomerang shape, arching from the Pannonian Plains of Slavonia between the Sava, Drava, and Danube Rivers, across hilly, central Croatia to the Istrian Peninsula, then south through Dalmatia along the rugged Adriatic coast. Croatia is made up of 20 counties plus the city of Zagreb and controls 1,185 islands in the Adriatic Sea, 67 of which are inhabited.

PEOPLE AND HISTORY
The Croats are believed to be a Slavic people who migrated from Ukraine and settled in present-day Croatia during the 6th century. After a period of self-rule and the establishment of an independent kingdom, Croatians agreed to the Pacta Conventa in 1091, submitting themselves to Hungarian authority. By the mid-1400s, concerns over Ottoman expansion led the Croatian Assembly to invite the Habsburgs, under Archduke Ferdinand, to assume control over Croatia. Habsburg rule proved successful in thwarting the Ottomans, and by the 18th century, much of Croatia was free of Turkish control. The Austrian monarchy also acquired control over Dalmatia at the close of the Napoleonic wars following centuries of rule by the Venetian Republic.

In 1868, Croatia gained domestic autonomy under Hungarian authority. Following World War I and the demise of the Austro-Hungarian Empire, Croatia joined the Kingdom of Serbs, Croats, and Slovenes (the Kingdom of Serbs, Croats, and Slovenes became Yugoslavia in 1929). During World War II, German and Italian troops invaded and occupied Yugoslavia and set up a puppet, Fascist regime to rule a nominally-independent Croatian state. This regime, under the hard-line nationalist Croatian Ustasha party, was responsible for the deaths of large numbers of ethnic Serbs, Jews, Roma, and other civilians in a network of concentration camps. It was eventually defeated by the Partisans, led by Josip Broz Tito, in what was essentially a civil war as well as a struggle against the Axis occupiers. The pro-Yugoslav Partisans included many ethnic groups, including a large number of Croatians, and were supplied in large part by the United States and the United Kingdom. Yugoslavia changed its name once again after World War II. The new state became the Federal Socialist Republic of Yugoslavia and united Croatia and several other republics together under the communist leadership of Marshal Tito.

After the death of Tito and with the fall of communism throughout Eastern Europe, the Yugoslav federation began to unravel. Croatia held its first multi-party elections since World War II in 1990. Long-time Croatian nationalist Franjo Tudjman was elected President, and 1 year later, Croatia declared independence from Yugoslavia. Conflict between Serbs and Croats in Croatia escalated, and 1 month after Croatia declared independence, the Yugoslav Army intervened and war erupted.

The United Nations mediated a cease-fire in January 1992, but hostilities resumed the next year when Croatia fought to regain one-third of the territory lost the previous year. A second cease-fire was enacted in May 1993, followed by a joint declaration the next January between Croatia and Yugoslavia. However, in September 1993, the Croatian Army led an offensive against the Serb-held self-styled "Republic of Krajina." A third cease-fire was called in March 1994, but it, too, was broken in May and August 1995, after which Croatian forces regained large portions of the Krajina, prompting an exodus of Serbs from this area. In November 1995, Croatia agreed to peacefully reintegrate Eastern Slavonia, Baranja, and Western Sirmium under terms of the Erdut Agreement, and the Croatian government re-established political and legal authority over those territories in January 1998. In December 1995, Croatia signed the Dayton peace agreement, committing itself to a permanent cease-fire and the return of all refugees.

The death of President Tudjman in December 1999, followed by the election of a coalition government and President Stjepan Mesic in early 2000, brought significant changes to Croatia. The government, under the leadership of Prime Minister Ivica Racan, progressed in implementation of the Dayton Peace Accords, regional cooperation, refugee returns, national reconciliation, and democratization.

National parliamentary elections held in November 2003 brought back into power the Croatian Democratic Union party (HDZ), which had governed Croatia from independence until 2000. The HDZ government, headed by Prime Minister Ivo Sanader, was narrowly re-elected in a November 2007 ballot. The Sanader government's priorities included membership for Croatia in the European Union (EU) and the North Atlantic Treaty Organization (NATO); Croatia joined NATO in April 2009. In July 2009, Prime Minister Sanader unexpectedly resigned, and Deputy Prime Minister Jadranka Kosor took over as Croatia’s first female Prime Minister. While in office, Prime Minister Kosor focused on tackling corruption at home, while pushing to overcome the last remaining hurdles to Croatia’s EU accession. In January 2010, Ivo Josipovic won the final round of presidential elections to replace two-term President Mesic. In December 2010, former Prime Minister Sanader fled the country in the face of a corruption investigation and was arrested in Austria. In July 2011, Sanader was extradited to Croatia, where he remained in custody until December 2011. Sanader’s trial on multiple corruption-related charges continued as of March 2012. President Josipovic and Prime Minister Kosor signed the EU Accession Treaty in Brussels in December 2011.

The center-left “Kukuriku Coalition,” made up of the Social Democratic Party (SDP), Croatian People’s Party (HNS), Croatian Peasant Party (HSS), and Istrian Democratic Assembly (IDS), gained a majority of seats in parliamentary elections held December 4, 2011. Prime Minister Zoran Milanovic and his new government took office on December 23, 2011. In a national referendum held January 22, 2012, Croatia took an important step on its path to EU accession with a two-thirds vote in favor of becoming the EU’s 28th member. The referendum saw a relatively low turnout, with only 43.51% of the electorate voting. A tentative date of July 2013 has been established for full EU membership.

GOVERNMENT AND POLITICAL CONDITIONS
The Croatian Parliament, also known as the Sabor, became a unicameral body after its upper house (Chamber of Counties) was eliminated by constitutional amendment in March 2001. The remaining body, the Chamber of Representatives, consists of 151 members who serve 4-year terms elected by direct vote. The Sabor includes 140 members from 10 geographic districts within Croatia (each district holds 14 seats), as well as eight seats guaranteed to representatives of national minorities (three for the Serb minority, and five for other smaller groups), and three seats for Croatians abroad without fixed residence in Croatia, the large majority of whom reside in Bosnia-Herzegovina. The Sabor holds regular sessions throughout the year, with two periods of recess in the summer and the winter.

The powers of the legislature include enactment and amendment of the constitution, passage of laws, adoption of the state budget, declarations of war and peace, alteration of the boundaries of the republic, and carrying out elections and appointments to office.

Following the death of President Tudjman, the powers of the presidency were curtailed and greater responsibility was vested in Parliament. The president is the head of state and is elected by direct popular vote for a term of 5 years. The president is limited to serving no more than two terms. In addition to being the commander in chief, the president nominates the prime minister-designate based on election results.

The prime minister assumes office following a parliamentary vote of confidence in the new government. The prime minister and government are responsible for proposing legislation and a budget, executing the laws, and guiding the foreign and internal policies of the republic. In addition to Prime Minister Milanovic, the cabinet has 21 ministers as of March 2012, including four deputy prime ministers, the majority of whom are members of the SDP. SDP coalition partners hold five cabinet seats: Principal Deputy Prime Minister and Minister of Economy, Minister of Foreign and European Affairs, Minister of Construction and Physical Planning, Minister of Culture, and Minister of Tourism.

Croatia has a three-tiered judicial system, consisting of the Supreme Court, county courts, and municipal courts. Croatia's Supreme Court is the highest court in the republic. The Supreme Court assures the uniform application of laws. Members of the high court are appointed by the National Judicial Council, a body of 11 members, and justices on the Supreme Court are appointed for life. The court's hearings are generally open to the public.

The Constitutional Court is a body of 13 judges appointed by Parliament for an 8-year term. The Constitutional Court works to assure the conformity of all laws to the constitution.

Croatia maintains an embassy in the United States at 2343 Massachusetts Avenue NW, Washington DC, 20008-2853, tel. (202) 588-5899, fax: (202) 588-8936. Consulates General of the Republic of Croatia are located in New York City, Chicago, and Los Angeles. Honorary consulates are located in St. Paul, New Orleans, Seattle, Pittsburgh, and Kansas City.

ECONOMY
Following World War II, rapid industrialization and diversification occurred within Croatia. Decentralization came in 1965, allowing growth of certain sectors, particularly the tourist industry. Profits from Croatian industry were used to develop poorer regions in the former Yugoslavia. This, coupled with austerity programs and hyperinflation in the 1980s, contributed to discontent in Croatia.

Privatization and the drive toward a market economy had barely begun under the new Croatian Government when war broke out in 1991. As a result of the war, the economic infrastructure sustained massive damage, particularly the revenue-rich tourism industry. From 1989 to 1993, GDP fell 40.5%. With the end of the war in 1995, tourism and Croatia's economy recovered moderately. However, corruption, cronyism, and a general lack of transparency stymied meaningful economic reform, as well as much-needed foreign investment.

Croatia's economy grew strongly in the 2000s, stimulated by a credit boom led by newly privatized and foreign-capitalized banks, some capital investment (most importantly road construction), further growth in tourism, and gains by small- and medium-sized private enterprises. One downside to these steadily improving trends was a strong growth in Croatia’s stock of foreign debt, which by 2010 had reached almost 100% of GDP.

Despite the gains, substantial challenges remain. Croatia’s economy was hit hard by the global financial crisis, and has recovered more slowly than many of its neighbors. The country experienced a drop from 2.4% GDP growth in 2008 to a 5.8% contraction in 2009. GDP fell a further 1.2% in 2010 (about $62.25 billion), while 2011 saw approximately 0.7% growth. Official unemployment is 17.9%. Croatia's external imbalances and high foreign debt present long-term risks to its economic well-being, as continued access to foreign credit may be severely limited. An inefficient bureaucracy, relatively high labor costs, and lack of transparency in taxes, fees, and the public tender process have all led to a generally unfavorable climate for foreign investment. The new government intends to eliminate certain non-tax fees on business, consolidate overlapping government agencies, and identify administrative barriers to foreign investment. Improvements to Croatia’s judicial system are not yet fully achieved, another hindrance to economic development.

The privatization process, begun in the 1990s, has been unsteady, largely as a result of public mistrust engendered when many state-owned companies were sold to the politically well-connected at below-market prices. The government sold three large metals plants in early 2007, but the Croatian state still controls a significant part of the economy, with government spending accounting for as much as 50% of GDP. Some large, state-owned industries continue to rely on government subsidies, crowding out investment in education and technology needed to ensure the economy's long-term competitiveness. The government is trying to privatize several state-owned shipyards. As of October 2011, there were signs of progress in this area, but the process had not yet been finalized.

FOREIGN RELATIONS
Croatia has made great strides on the road to Euro-Atlantic integration. NATO and EU membership have been strategic goals, as Croatia seeks to forge stronger ties with the west. Croatia received an invitation to join NATO at the NATO Summit in Bucharest, Romania in April 2008; it became a full member of the Alliance in April 2009. On December 9, 2011 Croatia signed its EU accession treaty, which Croatian citizens approved by a two-thirds majority in the January 22, 2012 referendum. Upon ratification by the other EU member countries, Croatia is expected to become a full EU member in July 2013.

In May 2003, the United States joined Croatia, Albania, and Macedonia to sign the Adriatic Charter, in which the three NATO aspirants pledged their commitment to NATO values and their cooperative efforts to further their collective NATO aspirations. In 2008, the Adriatic Charter expanded to include two new countries, Bosnia and Herzegovina and Montenegro. Since then, Croatia has become a leader in the Adriatic Charter, including in the development and deployment of a joint Adriatic Charter Police Training Mission to the Afghan National Army Military Police School in Kabul.

Croatia has been a member of the United Nations since 1992, and contributes troops to a number of UN operations, including those in the Golan Heights, Cyprus, Sudan, Liberia, Lebanon, Western Sahara, and Kashmir. In December 2009, Croatia ended a 2-year term as a non-permanent member of the UN Security Council. Croatia also contributes troops to support NATO-led Kosovo Force (KFOR) and since 2003 has participated in the International Stabilization Assistance Force (ISAF) in Afghanistan. The Croatian Parliament in December 2010 approved raising the ceiling on the number of soldiers in Afghanistan to 350. Croatia is a member of the World Trade Organization and the Central European Free Trade Organization.

Croatia is also active in the region, particularly in supporting its neighbors' Euro-Atlantic aspirations. Croatia has made progress on dealing with a number of post-conflict issues. Some of these, such as the status of refugees displaced during the 1991-95 war and determining the fate of missing persons from the war, remain key issues influencing Croatia’s relations with its neighbors.

U.S.-CROATIAN RELATIONS
Bilateral relations between the U.S. and Croatia are very strong. The United States opened its Embassy in Zagreb in 1992. U.S. engagement in Croatia is aimed at supporting Croatia’s development of a democratic, secure, and market-oriented society that will be a strong partner in Euro-Atlantic institutions. The U.S. also welcomes Croatia’s desire to play a positive and stabilizing role in the region.

In an effort to promote regional stability through refugee returns, the United States has given more than $27 million since 1998 in humanitarian demining assistance. Croatia hopes to remove an estimated 90,000 remaining mines by 2019. The United States has also provided additional financial assistance to Croatia through the Southeastern European Economic Development Program (SEED) to facilitate democratization and restructuring of Croatia's financial sector, largely through programs managed by the U.S. Agency for International Development (USAID). Most SEED funding and USAID programs in Croatia concluded in 2008. USAID closed its offices in Croatia in 2008.

The Department of Defense has a robust military-to-military relationship with Croatia. The U.S. provides military assistance to Croatia in the form of training, equipment, equipment loans, and education in U.S. military schools. Croatia also has a state partnership with the Minnesota National Guard, and participates in a joint training team with U.S. troops in Afghanistan.